Regulatory Alerts2010-06-02
Interpretation of definition of default as outlined in regulation 65 of the Regulations relating to Banks
The South African Reserve Bank clarifies that banks using the internal rating-based approach may apply a three missed monthly instalments criterion to define default for specific portfolios instead of the strict 90-day past due standard. This alternative interpretation is permitted only if banks formally notify the regulator, specify affected portfolios, quantify their impact, and demonstrate consistent internal and external reporting practices. Institutions failing to comply with either the strict day-count approach or the approved three-installment method face non-compliance findings and must submit remediation plans.
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